July 21, 2019

Colorado Court of Appeals: Bringing Malpractice Claim to Reduce Liability for Attorney Fees is Not Abuse of Process

The Colorado Court of Appeals issued its opinion in Parks v. Edward Dale Parrish, LLC on Thursday, February 7, 2019.

Torts—Malpractice—Abuse of Process—Breach of Fiduciary Duty—Attorney Fees—Expert Witness

Parrish and Edward Dale Parrish LLC (defendants) represented plaintiff in two cases, a partition case and a dissolution case, against plaintiff’s former, long-term girlfriend. Plaintiff was not satisfied with the results. After he failed to pay Parrish for his legal services, Parrish filed a notice of attorney’s lien in the partition case. In response, plaintiff filed this case against defendants, alleging that they provided negligent representation and breached their fiduciary duty to him in both cases. Defendants counterclaimed for breach of contract (seeking an award of fees incurred in previously representing plaintiff) and abuse of process (based on plaintiff bringing this case).

At the close of plaintiff’s evidence, defendants moved for directed verdicts on all of his claims. The district court concluded that the breach of fiduciary duty claim was duplicative of the negligence claim and dismissed that claim. Plaintiff moved for a directed verdict on the counterclaims, which the court denied. The jury returned verdicts for defendants on all claims and counterclaims. The court also awarded defendants costs for their expert witness. Plaintiff moved for judgment notwithstanding the verdict (JNOV). This motion was deemed denied when the district court did not timely act on it. 

On appeal, plaintiff first contended that the district court erred in denying his motion for directed verdict and motion for JNOV on defendants’ abuse of process counterclaim. Bringing a malpractice case to obtain a result that such an action is designed to achieve doesn’t constitute an improper use of process, regardless of the motive. Here, the district court erred in reasoning that the jury could find an abuse of process if it found merely that defendants didn’t provide negligent representation. Given the lack of evidence of any improper use of process, the district court should have granted plaintiff’s motion for a directed verdict or motion for JNOV on the abuse of process counterclaim.

Plaintiff next contended that the district court erred in dismissing as duplicative his breach of fiduciary duty claim relating to the partition case. Where the professional negligence claim and breach of fiduciary duty claim arise from the same material facts and the allegations pertain to an attorney’s exercise of professional judgment, the breach of fiduciary duty claim should be dismissed as duplicative.  Here, plaintiff alleged that Parrish breached his fiduciary duty by entering into a stipulation without his consent. The same allegation underlies in part the negligence claim and implicates Parrish’s exercise of professional judgment. Therefore, the district court did not err in dismissing the breach of fiduciary duty claim.

Plaintiff also contended that the district court erred in denying his motion for a directed verdict on defendants’ breach of contract counterclaim. Defendants claimed that plaintiff breached a contract by failing to pay them attorney fees. Plaintiff argued that defendants had to prove the reasonableness of the fees they sought through expert testimony, and because defendants didn’t present any such testimony, the claim necessarily fails. When breach of contract damages are unpaid attorney fees, laypersons can determine the reasonableness of fees without an expert’s help. Here, Parrish testified about the services rendered, the reasonableness of the time spent on the services, and the fees charged for the services, and the jury considered the bills to plaintiff. Thus, the jury had sufficient evidence to assess the reasonableness of the claimed fees.

The judgment in favor of defendants on the abuse of process counterclaim was vacated. The judgment was affirmed in all other respects. The case was remanded for the district court to enter judgment in plaintiff’s favor on the abuse of process counterclaim and to amend the judgment as to damages accordingly.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Underlying Rationale in General Steel Ruling Applicable to Court Actions

The Colorado Supreme Court issued its opinion in Boyer v. Health Grades, Inc. on Monday, June 1, 2015.

Abuse of Process—First Amendment Right to Petition.

Boyer and Singson, defendants in a suit brought by Health Grades, petitioned for review of the court of appeals’ judgment declining to affirm a favorable jury verdict on their counterclaim for abuse of process. The court of appeals remanded the case to the district court and ordered reversal of the verdict unless that court were to find that the claims initially brought by Health Grades were devoid of reasonable factual support or had no cognizable basis in law, in accordance with the appellate court’s understanding of the mandate of Protect Our Mountain Environment v. District Court (POME), 677 P.2d 1361 (Colo. 1984). On rehearing, the appellate court modified its opinion, expressly evaluating the recent judgment of the Supreme Court in General Steel Domestic Sales, LLC v. Bacheller, 291 P.3d 1 (Colo. 2012), which had found the heightened abuse of process standards of POME inapplicable to the filing of an arbitration complaint implicating a purely private dispute. Based on its own exegesis of POME and its progeny, as well as POME’s roots in federal jurisprudence, the court of appeals concluded that nothing in General Steel required the modification of its remand order.

The Court reversed the judgment of the court of appeals, holding that the underlying rationale for its judgment in General Steel concerning arbitration proceedings is equally applicable to actions filed in courts of law. Because it is uncontested by the parties that the action filed by Health Grades involved a purely private dispute, the Court remanded the matter with directions to affirm the jury’s verdict.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Supreme Court: Case Law from Protect Our Mountain Environments Case Not Applicable in Private Dispute At Issue Here

The Colorado Supreme Court issued its opinion in General Steel Domestic Sales, LLC v. Bacheller III on Tuesday, November 27, 2012.

First Amendment—Right to Petition—Trebeled Exemplary Damages.

The Supreme Court held that Protect Our Mountain Environment, Inc. v. District Court, 677 P.2d 1361 (Colo. 1984), (POME) is inapplicable where, as here, the underlying alleged petitioning activity was the filing of an arbitration complaint that led to a purely private dispute. Under POME, a plaintiff must meet a “heightened standard” when suing a defendant for the “alleged misuse or abuse of the administrative or judicial processes of government.” In this case, Harold Bacheller III sued General Steel Domestic Sales, LLC (General Steel), Discount Steel Buildings, LLC (Discount Steel), and the presidents and sole shareholders of each of the companies for abuse of process, malicious prosecution, and civil conspiracy, based on their filing an arbitration complaint against him. During trial, the trial court denied defendants’ request to include additional elements reflecting POME’s heightened standard in the malicious prosecution jury instruction. Because POME is inapplicable here, the Court affirmed the trial court’s ruling.

The Court also held that the trial court did not abuse its discretion by trebling the exemplary damages award against General Steel and Discount Steel. After the jury returned verdicts in Bacheller’s favor on several claims and awarded actual and exemplary damages, the trial court granted Bacheller’s motion to treble the exemplary damages award but against only General Steel and Discount Steel. Because the record supports the trial court’s finding that defendants acted willfully and wantonly during the pendency of the action and further aggravated Bacheller’s damages, the Court affirmed the trial court’s ruling.

Summary and full case available here.

Colorado Court of Appeals: No Bright Line Rule that Claims that Survive Summary Judgment Are Not Abuse of Process

The Colorado Court of Appeals issued its opinion in Health Grades, Inc. v. Boyer on Thursday, November 8, 2012.

Abuse of Process—Summary Judgment—Directed Verdict—Judgment Notwithstanding the Verdict—Sham Litigation.

Plaintiff Health Grades, Inc. appealed the trial court’s judgment following a jury verdict in favor of defendants Christopher Boyer and Patrick Singson on their abuse of process counterclaim. The judgment was reversed and the case was remanded with directions.

Health Grades is a Web-based information resource that provides health-care information and provider ratings online. Defendants are former Health Grades employees who resigned over a dispute as to whether websites they created improperly competed with Health Grades’ business.

Health Grades contended that the trial court erred by denying its motions for directed verdict and judgment notwithstanding the verdict as to defendants’ abuse of process counterclaim. Health Grades argued that, once its claims survived motions for summary judgment and directed verdict, they could not, as a matter of law, constitute “sham litigation.” However, there is no bright-line rule—and the Court of Appeals declined to adopt one—that states that any lawsuit that survives a motion for summary judgment or directed verdict cannot be the basis for an abuse of process claim. Thus, defendants’ abuse of process counterclaim was not automatically barred, because Health Grades’ claims survived motions for summary judgment and directed verdict. Nonetheless, the constitutional aspect of Health Grades’ defense to the abuse of process claims should have been decided by the court and should not have been submitted to the jury. Because the court failed to apply the heightened standard to determine whether the claims asserted by Health Grades were devoid of reasonable factual support or had no cognizable basis in law, the judgment was reversed and the case was remanded to the trial court to make this determination.

Summary and full case available here.